Consumer confidence slips in April: Danareksa survey
JAKARTA (JP): After two months of consecutive gains, consumer confidence dropped in April due to continuing infighting among the country's political elite, according to a monthly consumer confidence survey conducted by state PT Danareksa Securities.
The securities firm said the drop might signal that consumers were getting tired of the "unstoppable momentum of domineering political issues".
"This near boredom may undermine the progress of economic recovery, as we expect political tension may even heighten leading up to the General Session in August," Danareksa said, referring to the annual session of the People's Consultative Assembly (MPR) in which President Abdurrahman Wahid will deliver a progress report on his administration.
"Nevertheless, it remains too early to conclude that there is a long-term erosion in consumer optimism based only on the April results," the company said, pointing out that the drop only underpinned the fragility of consumer confidence since a slip was commonplace for any economy that was at the early stage of a business cycle upswing.
The consumer confidence survey is based on a representative sample of 1,700 households across six main areas.
Danareksa said the sample was scientifically selected to accurately represent Indonesian consumer characteristics, demographically and economically.
"Consumer outlook for the next six months is less optimistic than in the earlier survey," the investment company said.
The survey also found that the percentage of respondents who feel that jobs are plentiful increased slightly to 26.5 percent in April from 25.7 percent in March, while the proportion who consider job opportunities to be scarce is 51.5 percent, down from 52.8 percent.
"The decrease in consumer pessimism toward the job market may indicate an upturn in economic activity," Danareksa said.
Business sentiment
Meanwhile, Danareksa said in its February-March business sentiment survey that most respondents viewed that the overall macro and micro economic conditions were "presently in good condition", which was a major improvement compared to previous results.
Danareksa said the stronger business confidence was present in all sectors.
The business sentiment survey is conducted over two months and involves some 550 representative samples.
"Most CEOs (chief executive officers) also continued to claim that companies performed better in the past six months as most of them reported increases in sales revenue, profit as well as higher utilization of production capacity," Danareksa said, adding that CEOs' expectations continued to be bullish.
"The combination of fast improvements in the present conditions and bullish expectations typically indicate that the economy has just passed the bottom in the very early stage of the economic upswing," it added.
"What is more encouraging is that the improvement in business leaders' sentiments were uniform across all sectors."
Danareksa said that in March more business leaders claimed an increase in capital spending and inventories of raw materials over the past six months.
It added that most companies had plans to hire new employees, which was further proof of stronger business confidence.
"A significant majority of respondents remained bullish on the prospects of higher sales revenue, profit and production capacity utilization in the next six months," Danareksa said.
The firm added that despite the recent tension between the government, the military and other political elites, and the seemingly inability to handle acute pressure and high profile economic problems, business leaders' confidence in the ability of the government to enhance the economic climate, maintain political stability and security and promote a healthier business and investment environment remained intact and very robust.
"The majority of business leaders remained optimistic and confident about the government's ability to handle current situations," Danareksa said. (rei)